Triangle chart pattern is essential for traders due to several reasons. This pattern reflects decreasing volatility on the market that probably expands again, thus, it shows the current and forthcoming condition. Therefore, traders should know its main three triangle chart pattern forms, to better utilize this pattern.
Symmetrical Triangle
The symmetrical triangle happens when the asset price moves ups and down into a smaller and smaller area. In other words, the recent up should not be as high as the previous up. Similarly, the recent down is also not as low as the previous down.
The price develops lower high swings and higher low swings. If you connect all swing highs and swing lows with a trendline, then, it forms the symmetric triangle, where the two trendlines move into each other.
There will be a triangle when the two swing highs and two swing lows are connected with a trendline. Triangle patterns usually happen not only once.
Thus, traders normally wait for the price to make three swing highs and lows before they draw the trendline.
Ascending Triangle
Ascending triangle forms when both rising swing highs and lows reach similar price levels. If traders draw trendline along the similar swing highs, then, traders will get a horizontal line.
Meanwhile, the trendline that connects the rising swing lows is going upward. The trendline creates the ascending triangle.
In this triangle, the price still also confined to a smaller and smaller area. Yet, different from the symmetrical triangle, in ascending triangle the prices reach a similar high point on each up moves.
Descending Triangle
A descending triangle formed when lower swing highs and swing lows head to a similar price level. If traders draw a trendline on the similar swing lows, there will be a horizontal line.
At the same time, if traders connect trendline along with the falling swing highs, they get a descending triangle.
In the real world, there are possibilities traders find two points to be connected. Thus, there are also possibilities that traders cannot draw a perfect line connecting the highs and lows. Yet, that is perfectly fine, as long as the trendline follows the price action.